Archive for the ‘economic’ Category

Santa Won’t Visit China’s Toymakers Much This Year

December 1, 2008

Dongguan, China, produces a vast amount of the toys that will end up under Christmas trees around the world. Or it did, until all the factories there started to close because of the global economy….. leaving thousands of workers out of work and out of luck….

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At about six o’clock Thursday evening, around what used to be quitting time for the day shift at the He Jun toy factory in Dongguan, China, 40-year-old Wei Dong Li made his way to the factory’s front entrance, his three-year-old son Qian Jie tugging at his sleeve. The factory is now closed; a few security guards stand inside the locked gate. Posted each evening at the front entrance is a sheaf of documents: the latest rulings from a local court on compensation claims filed by many of He Jun’s 4,000 workers, Wei included. “They process a few of them a day, so I come back every other day to check and see if my case is on the list,” Wei says. He has no luck again. “I’ll just wait some more,” he says. “I have nothing else to do at this point.”

By Bill Powell
Time Magazine

Dongguan, along with a handful of similar, nearby towns, is the real Santa’s factory at the North Pole. A sprawling, charmless city of 7.5 million that sits 80 km southeast of Guangzhou, the provincial capital of Guangdong in southern China, Dongguan produces a vast amount of the toys that will end up under Christmas trees around the world. Toys were one of the critical, low-wage, low-tech industries on which China built its economic ascent over the past 30 years. But as workers such as Wei know better than anyone, 2008 is the year that that part of China’s miracle has come to an end.

It’s been six weeks since He Jun, a Hong Kong-listed company, shuttered two of its biggest factories in China — suddenly and without any warning, former workers say. They were among the latest and largest factory closures in China’s battered low-end industries: toy manufacturers, textile companies and shoe makers most prominent among them. China’s steadily appreciating renminbi currency — which makes Chinese goods more expensive in key exports markets like the U.S. — as well as higher costs embedded in a new labor law enacted last year were already wreaking havoc with companies that survived even in the best of times on the thinnest of profit margins. Now, with a global recession gathering pace, the best of times are gone, and the pain in what had been booming areas in southern China is spreading quickly. Fully half of China’s toy exporters, which sent nearly $8 billion worth of Barbies and Thomas the Tank Engines to export markets in 2007, were driven out of business in the first seven months of this year, Beijing’s General Administration of Customs said in a recent report. In the city of Shenzhen, the other major manufacturing center in Guangdong province, 50,000 people have already lost their jobs this year. And in Beijing last week, Zhang Ping, chairman of the National Development and Reform Commission, the nation’s key economic policy-making body, bluntly warned that “excessive production cuts and business closures will cause massive unemployment and that will lead to instability.”

In Dongguan, it already has. Earlier last week, on the evening of November 25, another large toy manufacturer here, Kai Da Manufacturing, laid off more than 600 of its workers because of slowing production. According to participants and eyewitnesses to what followed, a large group of the workers gathered in the front courtyard of the factory demanding to know what compensation they would receive. At first, a company manager told them that anyone with a good work record and less than five years service would receive less than 10,000 RMB—less than $1,500 at today’s exchange rates. Anyone with over seven years on the line and a good record would get 12,300 RMB or about $1,800.

Read the rest:
http://www.time.com/time/world/article/0,8599,
1862717,00.html?xid=rss-topstories

General Motors Loses Tiger Woods: Sign of the Economic, Cultural Times

November 29, 2008

Turns out, Tiger Woods wouldn’t really rather have a Buick. At least not anymore.

When Woods ended his nine-year relationship with General Motors Corp. on Monday — a mutual decision between a megawatt celebrity who doesn’t need the work and a teetering corporation that needs every penny — it offered yet another snapshot of how badly the American economy has deteriorated.

By EDDIE PELLS, AP National Writer

Woods is the world’s most marketable athlete with an estimated $100 million endorsements a year. If his agreement with one of the world’s most active sports sponsors dissolved, some experts wonder if any endorsement or sponsorship deal is really ironclad in these tough times.

“The real story here isn’t Tiger,” says Marc Ganis, the president of Sportscorp Ltd., a Chicago-based sports consulting firm. “It’s the auto industry. … There are a lot of parties who are going to have some difficulties finding sponsors to substitute for what the auto industry used to provide.”

Read the rest:
http://news.yahoo.com/s/ap/20081129/ap_on_bi_ge/sp
orts_endorsements_economy;_ylt=AsqLbWhFh3
EC3hlVB3FIU2us0NUE

Mumbai Violence Clouds India’s Economic Future

November 29, 2008

The terrorist siege in southern Mumbai, not far from its financial district, is likely to threaten India’s already murky economic future and thwart plans to transform the city into a regional financial center, economists and investors said.
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By HEATHER TIMMONS and KEITH BRADSHER
The New York Times
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India’s economy had already been slowing significantly, because of the global credit crunch and the rupee’s decline. The country’s leading stock market index, the Sensex, has been cut in half since January as foreign investors redirected billions of dollars out of the country. Real estate markets around the country are cooling off.

Now foreign investors and business executives, who fueled much of India’s blistering growth over the past three years, are expected to be even more cautious about investing in India, at least in the short run, analysts said. Local companies and executives, who have already put the brakes on growth projections, could revise them further.

“Of course there will be some setbacks” related to the attacks, said Hitesh Kuvelkar, associate director at First Global, a financial research firm. Even before the attacks, First Global predicted that India’s economic growth could slow to about 6 percent in 2009 and less than 4 percent in 2010.

An Indian soldier holds positions outside the Taj Mahal hotel ...
An Indian soldier holds positions outside the Taj Mahal hotel in Mumbai. Indian commandos have killed the last remaining gunmen in Mumbai’s Taj hotel to end a devastating attack by Islamic militants on India’s financial capital that left 195 dead, including 26 foreigners.(AFP/Sajjad Hussain)

The attacks, which left more than 150 people dead by Friday evening, made targets of foreigners, witnesses said. The heavily armed terrorists were able to bypass security at two of India’s most expensive hotels, and it has taken India’s military several days to quell the violence, raising questions about safety in even the most exclusive locations.

It may be some time before the hotels, the Taj Mahal Palace and Tower and the Oberoi, once regular haunts for executives, become deal-making hubs again. “I would not feel comfortable either staying in or going to meetings at the Taj or the Oberoi, at least in the near future,” said Joel Perlman, the president of Copal Partners, a research company.

Read the rest:
http://www.nytimes.com/2008/11/29/world/asia/29impact.html?_r=1&hp

Government-induced Economic Crisis Getting a Government-insured Resolution

November 28, 2008

There is a condign symmetry about this financial crisis. A government-induced crisis is getting a government-insured resolution.

The excesses of Freddie Mac and Fannie Mae are being mopped up by huge federal spending made all the more massive by all the reckless endeavors of the politicians, the regulators, and the financiers who frivoled with the intemperance of Freddie and Fannie.

Now President-elect Barack Obama has perhaps faced up to the mess. He has not shied away from bringing former Treasury Secretary Larry Summers onto his economic team as head of his National Economic Council.

By R. Emmett Tyrrell
The Washington Times

Mr. Summers was a proper critic of Freddie and Fannie, having noted this past summer that, “The illusions that the companies were doing virtuous work made it impossible to build a political case for serious regulation.” This virtuous work was extending mortgages to those who could not afford those mortgages. The toxic mortgages were then bundled in with healthy mortgages and sold around the world by Wall Street geniuses like some enormous chain letter whose day of reckoning came some months ago.

The endeavor was a fantasy that had to end badly and so it has. Yet at a certain level the constituent elements of the Democratic Party are given to fantasy and excess. Consider the most vocal critics of Mr. Summers. They are not bankers or economists. They are feminists, often feminist scientists, who forced him out of the presidency of Harvard for his recognition that women of genius are not as plentiful as men of genius in the sciences and math.

What he cited was a fact. Mr. Summers drew no invidious conclusions and offered no program that would limit the number of lady scientists. He just noted the data in a forum supposedly open to free discourse. Kaboom – the women of the fevered brow drove him from office. Remind me not to read a book aloud in Harvard Yard.

Read the rest:
http://www.washingtontimes.com/news/2008
/nov/28/recognizing-crisis/

Meltdown far from over, new mortgage crisis looms

November 27, 2008

The full scope of the housing meltdown isn’t clear and already there are ominous signs of a new crisis — one that could turn out the lights on malls, hotels and storefronts nationwide.

By MATT APUZZO, Associated Press Writer

Even as the holiday shopping season begins in full swing, the same events poisoning the housing market are now at work on commercial properties, and the bad news is trickling in. Malls from Michigan to Georgia are entering foreclosure.

Hotels in Tucson, Ariz., and Hilton Head, S.C., also are about to default on their mortgages.

That pace is expected to quicken. The number of late payments and defaults will double, if not triple, by the end of next year, according to analysts from Fitch Ratings Ltd., which evaluates companies’ credit.

“We’re probably in the first inning of the commercial mortgage problem,” said Scott Tross, a real estate lawyer with Herrick Feinstein in New Jersey.

That’s bad news for more than just property owners. When businesses go dark, employees lose jobs. Towns lose tax revenue. School budgets and social services feel the pinch.

Companies have survived plenty of downturns, but economists see this one playing out like never before. In the past, when businesses hit rough patches, owners negotiated with banks or refinanced their loans.

But many banks no longer hold the loans they made. Over the past decade, banks have increasingly bundled mortgages and sold them to investors. Pension funds, insurance companies, and hedge funds bought the seemingly safe securities and are now bracing for losses that could ripple through the financial system.

“It’s a toxic drug and nobody knows how bad it’s going to be,” said Paul Miller, an analyst with Friedman, Billings, Ramsey, who was among the first to sound alarm bells in the residential market.

Read the rest:
http://news.yahoo.com/s/ap/20081127/ap_on_bi_ge/melt
down_coming_soon;_ylt=Ao5Sg.24hesMbnCpBUd_uzes0NUE

China Cancels EU Summit; Economic Turndown Worries Everyone

November 27, 2008

The head of France’s business lobby said Thursday she is “worried” about the trade implications of China’s decision to pull out of an upcoming China-European Union summit.

The EU-China summit was planned for Monday in the French city of Lyon. On the sidelines, around 150-200 Chinese business executives had been expected to meet with European counterparts at an event organized by the French employers lobby Medef.

China called off the meeting, however, in protest at French President Nicolas Sarkozy long-awaited meeting with Tibet‘s exiled Buddhist leader Dalai Lama.

Medef’s President Laurence Parisot called China’s decision “a real shame.”

“This worries me for French companies,” Parisot told the Associated Press.

“I don’t understand what motivated the Chinese authorities,” he said, noting that the U.S. President George W. Bush, British Prime Minister Gordon Brown and German Chancellor Angela Merkel met with the Tibetan leader without provoking such a reaction.

Chinese Foreign Ministry spokesman Qin Gang hinted that his government may be looking at economic reprisals as well.

“Since France has major interests in China, since the French leader repeatedly says that he takes China as a major strategic partner, then why is he doing this?” he asked at a news conference Thursday in Beijing.

“This is exactly where we feel confused and where the Chinese government and people express strong dissatisfaction.”

Pulling out of the summit suggests that countering criticism on Tibet is a bigger priority for China’s communist leaders than working with the EU and nations like France on solutions to the global financial crisis.

Read the rest:
http://news.yahoo.com/s/ap/20081127/ap_on_bi_
ge/eu_france_china_trade_1

FDR and Obama: Similar in Anticipated Trouble, Hope?

November 21, 2008

Americans knew they were in for hard times when they elected Franklin Delano Roosevelt.  They were seeking hope.  But they had no idea of what really God had placed ahead.

Most of this is from Wikipedia:

FDR was the the thirty-second President of the United States. Elected to four terms in office, he served from 1933 to 1945 and is the only U.S. president to have served more than two terms. Franklin and Theodore Roosevelt were related but only distantly. They were fifth cousins. He was a central figure of the 20th century during a time of worldwide economic crisis and world war.

During the Great Depression of the 1930s, Roosevelt created the New Deal to provide relief for the unemployed, recovery of the economy, and reform of the economic and banking systems.

Although recovery of the economy was incomplete until almost 1940, the programs he initiated such as the Federal Deposit Insurance Corporation (FDIC), Tennessee Valley Authority (TVA), and the United States Securities and Exchange Commission (SEC) continue to have instrumental roles in the nation’s commerce. One of his most important legacies is the Social Security system.

As Britain warred with Nazi Germany, Roosevelt provided Lend-Lease aid to Winston Churchill and the British war effort before America’s entry into World War II in December, 1941. On the home front he introduced price controls and rationing, and relocation camps for 120,000 Japanese-Americans. Roosevelt led the United States as it became the ‘Arsenal of Democracy‘. Roosevelt, working closely with his aide Harry Hopkins, made the United States the principal arms supplier and financier of the Allies. America had a vast expansion of industry, the achievement of full employment, and new opportunities opened for African-Americans and women. The new Conservative coalition argued unemployment disappeared and closed most relief programs like the Works Progress Administratio (WPA) and Civilian Conservation Corps. As the Allies neared victory, Roosevelt played a critical role in shaping the post-war world, particularly through the Yalta Conference and the creation of the United Nations.

FDR consoled America through the Pearl Harbor attack and empowered engineers and scientists to create the atomic bomb.

Through all of FDR’s many trials he was crippled and in a wheel chair or in heavy steel braces.

Barack Obama’s tasks might be tall but as we compare him to FDR we should be cautious.

Related
“American Press has Turned Into a Joke” Comparing Obama To FDR, Lincoln

U.S. Intelligence Experts Point To Future American Decline

November 21, 2008

The political, economic and military influence of the United States will substantially decline over the next two decades, according to the country’s leading intelligence organisation.

By Alex Spillius
The Telegraph (UK)
The National Intelligence Council analysis Global Trends 2025: A Transformed World will serve as a sobering reminder to President-Elect Barack Obama of the challenges he faces leading a country that might no longer be able to “call the shots alone”.

The use of nuclear weapons will grow increasingly likely by 2025, the report found, forecasting a tense, unstable world shadowed by war.

“The world of the near future will be subject to an increased likelihood of conflict over scarce resources, including food and water, and will be haunted by the persistence of rogue states and terrorist groups with greater access to nuclear weapons.”

Mr Obama will assume power in January with wars in Iraq and Afghanistan, a resurgent Russia, an Iran determined to build a nuclear bomb and instability over the Palestinian territories.

The report also predicted that some African and South Asian states may wither away altogether, and organised crime could take over at least one state in central Europe.

Struggling to find a bright spot, researchers concluded that terrorism could decline if “economic growth continues in the Middle East and youth unemployment is reduced”.

Read the rest:
http://www.telegraph.co.uk/news/worldnews/north
america/usa/barackobama/3492802/US-influence
-to-decline-NIC-intelligence-report-predicts.html

Stocks Slump As Signs Point To Harder Times

November 20, 2008

Market closes below 8,000 on news of business price cuts, fewer home starts; Fed anticipates further economic slowdown next year.

By Neil Irwin and David Cho
The Washington Post

Businesses cut prices at a record rate and builders started fewer new homes last month than anytime on record, according to new government data, as the outlook for the economy continues to dim.

An investor watches a market board indicating the Chinese stock ... 
An investor watches a market board indicating the Chinese stock market index in a trading house in central Beijing.(David Gray/Reuters)

The data helped spur another terrible day for the stock market, as did a projection of more hard times ahead by leaders of the Federal Reserve. A serious recession now appears all but assured.

The stock market fell another 5 percent, as measured by the Dow Jones industrial average, which closed below 8,000 for the first time in this bear market. New-home starts in October were the lowest since at least 1959, when the government began keeping data. The consumer price index plummeted by the most since that series of monthly data was started in 1947, as the economy slowed so abruptly that companies had to slash prices to sell products.

And Federal Reserve leaders released projections indicating they expect the economy to worsen significantly in the coming year. The most pessimistic of 17 Fed officials expects joblessness to rise to 8 percent at the end of 2009, which would be the highest in a quarter-century.

“We’re in the deep portion of the economic trough,” said Richard Yamarone, chief economist of Argus Research, explaining yesterday’s market sell-off. “So you have to expect a certain degree of negative sentiment, you almost have to expect doom and gloom at this point.”

Read the rest:
http://www.washingtonpost.com/w
p-dyn/content/article/2008/11/19
/AR2008111900943.html?hpid=topnews

Fading American Economic and Military Dominance; Even More Global Danger – Experts

November 19, 2008

The top U.S. intelligence panel this week is expected to issue a snapshot of the world in 2025, in a report that predicts fading American economic and military dominance and warns of a nuclear arms race in the Middle East.

By Nicholas Kralev
The Washington Times

The predictions come from the National Intellignce Council (NIC), part of Director of National Intelligence Michael McConnell’s office.

The NIC report, a draft copy of which is titled “Global Trends 2025: A Transformed World,” is slated for release as early as Thursday.

The report also predicts “a unified Korea” is likely by then, and that China  will be the world’s second-largest economy and a major military power.

“The United States will remain the single most powerful country, although less dominant,” according to a “working draft” of the document obtained by The Washington Times. “Shrinking economic and military capabilities may force the U.S. into a difficult set of tradeoffs between domestic and foreign-policy priorities.”

A senior intelligence official said some details have changed in the final report, but “the thrust is the same.”

The draft says:

“The next 20 years of transition toward a new international system are fraught with risks, such as a nuclear arms race in the Middle East and possible interstate conflicts over resources.”

“We see a unified Korea as likely by 2025 and assess the peninsula will probably be denuclearized, either via ongoing diplomacy or as a necessary condition for international acceptance of and cooperation with a needy new Korea.”

Thomas Fingar, deputy director of national intelligence for analysis and chairman of the NIC, said Tuesday that the report “should not be viewed as a prediction.” Even “projection” is not entirely correct, he said, though he used that word several times during a luncheon at the Washington Institute for Near East Policy.

Read the rest:
http://www.washingtontimes.com/news/2008
/nov/19/panel-foresees-lesser-us-role/